10 October 2024
If you are covering reports that the Chancellor is considering increasing capital gains tax rates to 33-39%, please see the following comment from Rachael Griffin, tax and financial planning expert at Quilter:
“It is well understood that capital gains tax is in the crosshairs ahead of the Labour’s first budget later this month, and an increase no longer seems to be an ‘if’, but a ‘when’ and ‘how much by’.
"Reports today that Chancellor Rachael Reeves is considering hiking capital gains tax rates to between 33-39% are not all that surprising given an alignment to income tax rates had previously been tabled, but questions remain whether such a drastic hike would achieve much in the way of filling the Chancellor’s ‘black hole’.
“A full-scale reform of CGT has perhaps been deemed too lengthy a process for the Chancellor to take on, so hiking rates may be viewed as a stop gap in the hopes of boosting coffers in the nearer term. However, the real question will be whether it will raise more tax - which is only likely to be in the hundreds of millions at best - or whether it would simply make people change their behaviours. Unless there is a delay before implementation, increasing CGT rates would likely only incentivise people to hold assets for the long term rather than result in a quick and immediate increase in revenue.
“At this stage, nothing has been confirmed so unless realising gains from investments or selling a second home or business had already been in your plans, making decisions based on what might happen is not sensible. Nonetheless, given the already tight squeeze on the various tax allowances and thresholds, as well as the rumours which are rapidly building ahead of the budget, it would be wise to ensure you seek professional financial advice where possible to help you make the most tax efficient decisions for your circumstances.”
